New Nevada SRPD Rules

Todd: Hello welcome to Todd Miller TV. I’m joined here today with Oana, Thank you for being here. Oana: You’re welcome. Todd: So we’ve got this new law that came in to effect that said: starting October 1st, that sellers had to fill out a Seller’s Real Property Disclosure form. And what had we’ve seen in the market place here in Las Vegas is that, Bank weren’t/Institutional Investors weren’t filling these out. What they would do is, we had a waiver that they were telling the buyer “you have to waive the SRPD or we won’t give you the house” the state legislator like that so they got rid of the rule. So, what I have Oana here is, she sell’s about 3 to 4 hundred Listings a year. So she sees these forms filled out by her sellers. And I just ,Oana wanted you to sort of tell the people like, what everything on here was, and what this means, an what it doesn’t mean to the buyers. Oana: Okay, this form is really interesting because when this form is correctly filled out, it actually provides a lot of information to the buyer. The issue is, that institutional sellers meaning banks and asset management companies and those sorts of sellers, downly, I hate to day this but they don’t fill them up correctly. And they don’t fill them up for a couple of reasons. One, they’re working several hundred properties and they simply don’t have the time to fill them out correctly. Another reason they don’t do it is because they’re simply afraid. They’re afraid to say anything on here. So you’ll see a lot of times they will mark “Not Applicable (N/A)” on everything, So it’s always funny when they say “Electrical System-N/A” Clearly the house has and electrical system, right? Todd: Yeah! So what would be/give me something what would not be applicable, like on an average house that’s on there. Oana: Okay, on an average house, something that would not be applicable would be something like a wood burning system. In Las Vegas very few homes have a wood burning system. Or a septic tank. Again in Las Vegas very few homes have a septic tank. So those would be N/A. Todd: Central Vacuum. Oana: Central Vacuum? Todd: Some houses have ’em, most houses don’t. Oana: Right. So those will be things that’ll be N/A. Todd: Okay. Oana: A lot of times you’ll see a lot of Institutional Sellers say “No” on everything. Which/that’s fine. That there’s no problem with anything. I don’t have any disagreement with that, but then when you go to the page 2 of the Seller’s Real Property Disclosure, there are couple of items that they should never mark, almost never mark “No” on. For example Number 8, it says: Any feature of the property shared in common with a joining land owners. So don’t/if you live in the city and you have a fence, you’re (denly) sharing that fence right? With your neighbor. Todd: Yeah! It even says that on there. Oana: Right. Todd: Such as walls, fences, road, driveways or other features. Oana: Right. So that should generally be marked “Yes”. However when you’re dealing with and Institutional Seller, they would generally mark “No” on everything. So that’s really my issue with the SRPD, is that the intention is good, the practical application, not so much. So you’ll see a lot of “NO’s” a lot of “N/A” So you’re not getting the information you’re really looking for. Todd: What if there was a problem, but it was fixed? How do they/How does that/How should that be filled out? Oana: Okay. There is a box at the bottom that’s open for explanations. Or you can attach a separate sheet that you can go ahead and explain what has happened to the property. And there’s a lot of debate about how to deal with that. So for example, If I had an airconditioning system that we had repaired, technically we’re supposed to disclose that. But if I’ve had an airconditioning system that has been replaced, am I supposed to disclose that? That’s open to interpretation. Todd: So someone steals your AC unit. And then you have a new AC unit put in, and then when they come to buy the house, they say/you say “Oh yeah, it’s a brand new Aiconditioning system” and they look at the SRPD and say “It says here there were no problems with it. Why was it replaced?” So maybe if it broke, you can disclose that. But if someone stole it would you maybe disclose that? is that a real… Oana: You know, that a good point. An airconditioning system is actually a veryu unique system. Because the airconditioner, for example the compressor has gone out and there are no parts, it’s an old unit so we have to replace it. Then do we really disclose if there’s anything wrong with the airconditioner? Well, No! Because that is a brand new unit. So it’s really very debatable on how that should really be filled out. Some of you people have to understand is that agents cannot/are forbidden by Law from filling these out. Todd: So, if the seller hands the agent and say “Agent fill this out for me and I’ll sign it, or you read it to me and I’ll/or you can check the boxes. Oana: We cannot mark anything on here. Todd: Okay. Oana: Okay? We cannot mark anything on here. You can ask us for/You can ask us questions. And we’ll answer the questions to the best of our knowledge. Most of our time, if it’s something very simple like electrical system, what does that mean? You know, I can explain that. If it’s more complicated than that, then i will generally refer somebody out to speak with an attorney or someone like that. This is a legal document. This is a legal disclosure. And sometime you forget that well it’s just another Real Estate form. Well yes it is but this is a legally binding document. So say that s home owner checks no on the roof problems, and then the buyers goes to get an inspection and finds that there’s a leak on the roof and there’s some upside on the roof. When you go up there you can see where there’s like some water has been on the beams up there. And then the buyer comes back and say ” You didn’t disclose a roof problem on this form and we found the problem with the roof”. Oana: Okay. Well the question at that point is “did the seller know?” It’s possible the seller didn’t know. So if the seller didn’t know, he couldn’t disclose that which he did not know. If the seller knew he should have disclosed it. Todd: Okay. What happens/Let’s say that if the seller had a problem. They had a company come out and fix it. And the company says “We can’t really fix it because it’s gonna cause us much.” So the seller say “Fine, I’ll just sell it to somebody.” And then they fill up the SRPD and don’t mark it. Mark no problems. And then the buyer buys the house and closes. And then a week after they close, they find a problem. And they go “Oh, must be a new problem.” So they call a company to fix it. The company comes out, and the company says “Oh, yeah! We saw this/we were here couple of months ago. The old owner, we told him that is gonna cost $5,000 to fix.” Then what recourse does a buyer’s have? I mean, the seller obviously knew because this other person is saying “we’ve been out here.” Oana: That is very sticky. The buyer’s remedy is actually pretty substantial. Todd: Okay. Oana: It can be anything form 3 times the cost to remedy the situation. Depending on how outrageous it is. It could mean litigation even possible reversal of the sale. Todd: Oh wow! Okay. Oana: So, it is very serious. This is not/people don’t think of Real Estate as being very serious. this Seller’s Real Property Disclosure is a very serious form. And it doesn’t have a ramifications long term for both the buyer and the seller. Particularly for the seller. The seller does need to disclose If they don’t disclose, then they do have some liability. If you notice that the first 2 pages of the Seller’s Real Property Disclosure is what the seller has to disclose to the buyer? Todd: Yep! Oana: The 2nd 2 pages, single space. All the ramifications and all the reasons why the seller has to be be truthful and disclose all of this. So. most people don’t read it. You know, I can’t encourage people strongly not to read everything. Actually the both the buyer and the seller have to initial every page and the last page has to be signed by both of them. So they do all have to acknowledge that they’ve read this. Hopefully people read it, understand it. But also understand that when they’re dealing with institutional sellers, this forms generally are not filled out correctly. Todd: What about, I’m selling my house to my Brother? Do I have to provide an SRPD? Oana: That’s a great question. Generally speaking, Seller’s Real property Disclosure is called and Arms Length Transaction. So somebody not related to you, not your spouse, not your brother, not your sister, that sort of thing. Todd: And there are some a couple instances where you don’t have to provide them. And they’re listed in here. They still/you know, the seller’s saying “you have to waive it” the buyer can’t waive it. But there are a couple exemptions. One of those are close relatives like a brother, sister, parent or child. Oana: You know another exemption is if you but at the Trustee sale you’re not gonna get one. Todd: Yeah! exactly if you bought it at the Trustee Sale you’re not gonna get the (SRPD). Awesome! Alright, well Thank you very much. Oana: You’re welcome! Todd: So that’s my update for today. The Seller Real Property Disclosure. Expect to get one if you’re buying a property. And if you’re a seller and you have to fill in this out, It’s your form to fill out. make sure that you fill it out yourself and to the best of your knowledge. And if you fix something, just make a note in the things and “Hey, we have a leak but I fixed it. And haven’t had a problem or whatever.” So, that’s the update for today and hope to see you on another video. Thanks!